Turkey’s largest government-backed bank, Ziraat Bankası to launch Islamic banking subsidiary (By IFN)

Turkey’s largest government-backed bank, Ziraat Bankası to launch Islamic banking subsidiary

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TURKEY: The country’s largest government-backed bank, Ziraat Bankası has announced its intentions to launch a fully-fledged Islamic banking subsidiary and is currently seeking partnerships for the venture. However, the bank will maintain a majority stake in the establishment. “Ziraat Bankası is working towards establishing a participation bank; we have set some people to work on this subject. This bank will be established as a separate bank," said Hüseyin Aydın, its general manager. The republic has as of late increased its attention towards the growth of its Islamic, or participation banking market. The government held its eighth Turkish-Arab Economic Forum earlier this month, which saw discussions on the potential of Sukuk as a funding vehicle for the country’s development projects. The Capital Markets Board of Turkey is also currently working on new regulations to approve a wider range of Sukuk; including Istisnah, Murabahah, Mudarabah, Musharakah and Wakalah. Local construction and real estate conglomerate Agaoglu Group is also set to issue the first tranche of its US$2 billion Sukuk program – estimated at US$250 million – this month for the construction of the Istanbul Financial Center. The four existing participation banks in Turkey; Albaraka Turk, Asya Katılım Bankası, Kuveyt Türk Katılım Bankası and Türkiye Finans Katılım Bankası collectively saw an advance of 25% in total assets to TRY70.2 bilion (US$39.21 billion) in 2012, with its net income increasing by 19% to TRY916 million (US$511.67 million) – signaling a bright future for the country’s participation banking industry.